Subprime automotive loans increase in Q3 2011, according to Experian Automotive
Latest analysis shows 21.87 percent of new vehicle loans went to nonprime, subprime and deep subprime customers
Schaumburg, Ill., Dec. 1, 2011 — Experian Automotive today announced that lenders are increasing loans to credit-challenged customers. According to its quarterly automotive credit analysis, 21.87 percent of all new vehicle loans went to customers in the nonprime, subprime and deep subprime categories. The largest percentage increases were in the two highest-risk segments — deep subprime, which jumped 17.3 percent, and subprime, which jumped 17.8 percent. Nonprime loan share jumped by 12.5 percent.
The analysis also showed that the average consumer credit score for both new and used vehicle loans dropped in Q3 2011. For new vehicle loans, the average credit score fell from 769 in Q3 2010 to 763 in Q3 2011. For used vehicle loans, the average fell from 683 in Q3 2010 to 676 in Q3 2011.
“The automotive finance industry is continuing a steady climb to good solid footing,” said Melinda Zabritski, director of automotive credit for Experian Automotive. “Consumers continue to do a better job of repaying loans, while at the same time, many of the most risky loans from 2007 and 2008 are now off the books. These factors combine to lower the total volume of dollars at risk and give lenders more confidence in loosening their overall lending standards.”
During Q3 2011, 30-day delinquencies fell 7.05 percent (2.99 percent in Q2 2010 to 2.78 percent in Q3 2011), while 60-day delinquencies fell 7.4 percent (0.77 percent in Q2 2010 to 0.71 percent in Q3 2011). The total volume of dollars at risk also fell by $2.99 billion from Q3 2010 to Q3 2011.
“Overall, our Q3 analysis shows very positive signs for the automotive lending industry,” said Scott Waldron, president of Experian Automotive. “With more loans being booked outside of prime, lenders are showing they are willing to be more flexible in their lending strategies. However, consumers may still have the impression that lending is extremely tight, so it is important for lenders and retailers to educate car shoppers that there are financing options available to a wider group of consumers.”
In other findings:
• Repossession rates dropped by 6.4 percent, from 0.67 percent in Q3 2010 to 0.62 percent in Q3 2011.
• The average loan amount for new vehicles was up $600, going from $25,273 in Q3 2010 to $25,873 in Q3 2011.
• The average loan amount for used vehicles jumped $653, from $16,706 in Q3 2010 to $17,359 in Q3 2011.
Experian Automotive’s quarterly credit trend analysis features market reporting data and analysis from Experian Automotive’s AutoCount® Risk Report, which analyzes automotive lending markets based on a uniform measurement of credit quality that segments markets by geography, credit score and vehicle registrations, among other factors. It also incorporates data from the Experian–Oliver Wyman Market Intelligence Reports, which provide topical, quarterly analysis; peer benchmarking options; and commentary on key issues facing the financial services industry.
For more information on Experian Automotive’s AutoCount Risk Report, visit https://www.autocount.com. To subscribe to the Experian–Oliver Wyman Market Intelligence Reports, go to http://www.marketintelligencereports.com. VantageScore®, a tri-bureau credit score, was used to provide average risk scores for the population segments.
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About Experian Automotive
Experian Automotive is a leader in providing information services and market intelligence to manufacturers, dealers, finance, insurance and aftermarket companies, helping them increase customer loyalty; target and win new business; and make better lending, purchasing and production decisions. Experian’s AutoCheck reports provide customers with in-depth vehicle history information to confidently understand, compare and select the right vehicle. Its North American Vehicle DatabaseSM houses more than 650 million vehicles and, when combined with Experian’s credit, consumer and business information assets, meets the industry’s growing demand for an integrated information source. Experian technology supports top automotive businesses, including eBay Motors, O’Reilly Auto Parts, Affinia, CarMax and NADAguides.com. For more information on Experian Automotive and its suite of services, visit our Website at http://www.experianautomotive.com.
Experian is the leading global information services company, providing data and analytical tools to clients in more than 80 countries. The company helps businesses to manage credit risk, prevent fraud, target marketing offers and automate decision making. Experian also helps individuals to check their credit report and credit score and protect against identity theft.
Experian plc is listed on the London Stock Exchange (EXPN) and is a constituent of the FTSE 100 index. Total revenue for the year ended March 31, 2011, was $4.2 billion. Experian employs approximately 15,000 people in 41 countries and has its corporate headquarters in Dublin, Ireland, with operational headquarters in Nottingham, UK; Costa Mesa, California; and São Paulo, Brazil.
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